As the impact of the COVID-19 pandemic deepens, the world is changing. With 50% of the planet’s population under lockdown, is remote work the new normal? The media narrative is rightly focused on the short-term effects of the virus on people's health, working lives, and the economy. What's been less well covered is the actual impact on the economy and the legal confusion that comes with it. At present, this is the big unknown, and it is dependent on the severity of the recession, whether it is actually going to be a depression, and how deep the second order effects are. The fact that many companies are now asking their employees to work remotely for an indefinite period of time could lead to some huge effects on the wider economy, with remote working apps and cybersecurity companies likely to benefit from this.
The most immediate, short-term effect of the current crisis is that most companies are asking their employees to work from home. This shift has re-ignited a debate about the value of remote work – and the challenges it presents. The last decade has seen many companies experiment with remote working, only to find that it did not always offer the benefits that it was widely assumed to.
This was the case, for instance, for IBM. Back in 2009, the company reported that 40% of its employees were working remotely. This allowed the company to sell off its office buildings, a decision that allowed it to make almost $2 billion. Yet in 2017, IBM reversed the decision pulling the majority of its workers back in-house.
There were several reasons for this decision. IBM highlighted the fact that maintaining the mental health of their remote employees was difficult, and in fact research shows that this is a major challenge for remote workers more generally. Look a little deeper, though, and it's also clear that many companies have concerns about declining productivity when moving to remote work, and the extra investment required to put in place to manage these workers effectively. All of these concerns are now redundant. Many companies have been forced to move to remote working whether they like it or not. This means that many now have to face – and solve – the problems created by this form of working. Doing that is going to have huge knock-on effects across many sectors of the economy.
First, companies that offer remote working solutions are likely to prosper. This includes companies that offer software and other products directly designed to facilitate remote working, such as cloud-based collaboration systems. This will require new set of legal tools for corporate attorney to implement and deal with growing concerns over privacy and user data as it grapples with its new found role as a key part of global infrastructure.
Businesses that provide ancillary systems such as appointment reminder software and cloud storage are also growing in the new environment. These systems have been growing in popularity across all sectors in the past few years, but demand is expected to spike in the coming months.
Less obviously, the move to remote work will be paralleled by a move to freelance work. As employees move out of their offices, they are likely to start contracting their services to multiple employers, rather than sticking to one company. This, in turn, means that online freelance marketplaces (Upwork, for instance) and web hosts are also likely to benefit from the shift to remote work.
The move to remote work has benefits for the cybersecurity sector. Cybersecurity professionals have long struggled to secure remote systems, but have found it difficult to argue for increased investment in the tools required to do so. Many are now rushing to implement security measures that have long been planned, and investment in security software is likely to see a short to medium-term spike.
There will be two major elements of this investment. The first will be in the technical tools required to secure remote work environments. This will include enterprise-level contracts for Trusted VPN Companies and an increase in demand for cyber threat intelligence systems. Encrypted cloud storage, encrypted email systems, and other forms of secure communication software are also going to make big gains.
Secondly, and perhaps less obviously, companies offering training in cybersecurity, and particularly those that aim to teach employees how to stay safe while working remotely will be in increased demand. As workers leave the office, they are going to have to change their habits by recognizing that their home WiFi networks and their smartphones are also cybersecurity risks.
Times of crisis always lead to unexpected changes, of course, and predicting the long-term impact of COVID-19 on the economy is almost impossible. In the short term, however, some things are clear: the move to remote work will accelerate processes that have long been visible in may sectors. These include a move to de-centralized workforces and a parallel rise in freelance work.
These shifts will cause problems for some sectors, but opportunities for others. Even now, we are seeing companies benefitting from the crisis, whether this is crypto miners or online learning portals opening their courses to a suddenly expanded online workforce.
In short, though the Covid-19 pandemic might lead to the economic crash of generation, like all crashes this will lead to a re-calibration of the economy from which some companies will benefit, and as an investor, it is critical to begin to think where this will occur.
